Arcturus Therapeutics Holdings Inc. (ARCT) Q4 2019 Earnings Report, Transcript and Summary

Greetings. Welcome to the Arcturus Therapeutics Fourth Quarter and Fiscal Year 2019 Earnings Call. [Operator Instructions]. Please note, this conference is being recorded.I will now turn the conference over to your host, Neda Safarzadeh, Director, Head of Investor Relations. Please go ahead.

Thank you, Operator, and good afternoon, everyone. Thank you for joining Arcturus' earnings conference call. We are excited for this opportunity to discuss the company's fourth quarter and year-end 2019 operating results and certain recent developments. We are joined today by Joseph Payne, President and CEO; and Andy Sassine, CFO. Dr. Pad Chivukula, CSO and COO, is also on the line and will be available to address questions during the Q&A session.Joe will kick off the call with a high-level review of Arcturus. Next, Andy will discuss the fourth quarter financial results and recap certain recent developments which is aimed at strengthening the company's balance sheet. Finally, we will open the call for the questions and answers.Before we begin, I would like to remind everyone that except for statements of historical facts, the statements made by management and any responses to questions on this conference call constitute forward-looking statements that involve substantial risks and uncertainties for purposes of the safe harbor provided by the Private Securities Litigation Reform Act of 1995. Any statements other than the statements of historical facts included in this communication, including those regarding the strategy, future operations, the status of preclinical and clinical development programs, the planned initiation of clinical trials, the likelihood of success of the development programs, the planned initiation of clinical trials, the likelihood of success of the company's coronavirus COVID-19 vaccine or other products and the company's current and future cash and financial position are forward-looking statements.Actual results and performance could differ materially from those projected in any forward-looking statements as a result of many factors, including without limitation, an inability to develop and market product candidates, unexpected clinical results and general market conditions that may prevent such achievements or performance. Such statements are based on management's current expectations and involve risks and uncertainties, including those discussed under the heading Risk Factors in Arcturus' annual report on Form 10-K for the fiscal year ended December 31, 2018, filed with the SEC on March 18, 2019, and in subsequent filings with, or submissions to, the SEC. We intend to file the December 31, 2019, annual report on Form 10-K on Friday, March 13, 2020. Except as otherwise required by law, Arcturus disclaims any intention or obligation to update or revise any forward-looking statements, which speech only as of the date they were made, whether as a result of new information, future events or circumstances as otherwise.I will now turn the call over to Joe.

Thank you, Neda. Good afternoon, everyone. It's good to be with you. Thank you for joining our quarterly call today. We are pleased with the progress we've made during this past year, and we look forward to a productive 2020. This afternoon, we will provide an update on our flagship program, ARCT-810, along with our coronavirus vaccine partnership and other recent highlights.For those of you who are new to Arcturus, we are a leading messenger RNA medicines company focused on the discovery, development and commercialization of therapeutics for rare diseases and vaccines. We utilize our enabling technologies, including our LUNAR lipid-mediated delivery and our Self-Transcribing And Replicating RNA or STARR technology. We're also known for our innovative manufacturing processes in messenger RNA drug substance manufacturing and drug product manufacturing.Arcturus' pipeline of RNA therapeutics includes a flagship program to potentially treat ornithine transcarbamylase or OTC deficiency, also named as ARCT-810. OTC deficiency is a rare disease, but the most common urea cycle disorder. Patients who are afflicted with this disease have difficulty removing toxic waste products as proteins are digested. OTC deficiency is caused by mutations in the OTC gene, which leads to a nonfunctional or deficient OTC enzyme. The dysfunctionality can often cause a neurological damage and severe damage to the liver. ARCT-810 incorporates our LUNAR lipid-mediated delivery technology, and it's designed to effectively deliver OTC messenger RNA into liver cells and enable OTC deficient patient to produce healthy, functional OTC enzymes in their own liver cells. By intervening directly in the underlying disease process, ARCT-810 has the potential to be a significant new messenger RNA therapy for these patients.Well, since our last investor call, the IND-enabling studies have been completed. We successfully completed multiple GMP manufactured batches of drug substance and drug product. These batches have passed release criteria, and are planned to be used in our human clinical trials. And we have good news to share. The investigational new drug application for ARCT-810 was filed today with the U.S. FDA. This represents a significant milestone for the company as we transition into a clinical stage pharmaceutical company.We have worldwide rights to ARCT-810. We remind you that the FDA has already granted orphan drug designation for this program. We expect to provide more details on the clinical plan, including the design of the study, once the IND has been accepted. The FDA has recommended that we can go directly into stable patients, and we are currently evaluating the merits of a study utilizing healthy volunteers as well.In January, we announced the appointment of Dr. Steve Hughes as our Chief Development Officer. Dr. Hughes brings over 20 years of clinical development experience, including multiple successful RNA therapeutic approvals in rare diseases. He's been involved in more than 50 clinical trials throughout his career. Dr. Hughes will provide seasoned leadership and direction to clinical operations, clinical affairs, clinical sciences, data management and biometrics and drug safety. His initial focus will be on ARCT-810 for OTC deficiency as it advances into human trials.Now moving on to an important recent development in which we announced on March 4, and this is the partnership with Duke-NUS Medical School to develop a vaccine for coronavirus also known as COVID-19. Duke-NUS is a partnership between 2 world-class institutions, the Duke University School of Medicine and the National University of Singapore. The Arcturus vaccine that we've now named as LUNAR-COV19 utilizes STARR technology, which is an acronym for Self-Transcribing And Replicating RNA technology. We have observed STARR technology in preclinical models to be effective at extraordinarily low doses, greater than 30-fold more efficient than conventional messenger RNA. The Arcturus manufacturing process has been applied in multiple large double-digit gram GMP batches of highly pure RNA in our flagship linear OTC program.As we all know by now, the coronavirus has become a serious global health threat, and we are providing our resources and expertise in a collaborative effort to develop a COVID-19 vaccine. This recently announced coronavirus vaccine collaboration is our fifth strategic RNA vaccine relationship. As a reminder, Arcturus has established relationships through sublicenses with a large pharmaceutical and 2 animal health companies for prophylactic vaccines and also a collaboration with a private biotechnology company for personalized cancer vaccines.The World Health Organization has hailed Singapore as an exemplar for other countries in dealing with the coronavirus. And as such, the Arcturus team is honored to work with Duke-NUS as we develop a COVID-19 vaccine. And if successful, could be used to vaccinate millions of people. The vaccine development program for coronavirus utilizes Arcturus' proprietary STARR technology platform, which combines the self-replicating RNA with our LUNAR nanoparticle delivery system. The concept underlying STARR is that the self-replicating RNA, when it's delivered to an individual, will trigger rapid and prolonged antigen expression within host cells, resulting in protective immunity against the infectious pathogen, which is COVID-19 in this case.There are multiple efforts ongoing around the world to develop vaccines against COVID-19. We believe our Arcturus potentially has an important competitive advantage by employing STARR technology and that due to the superior immune response and sustained protein expression that is possible with this technology, we expect to be able to produce a vaccine that will confer protective immunity at much lower doses compared to other vaccine technologies, including conventional messenger RNA vaccines. This could lead to the ability to treat many more people with a single GMP manufactured production batch, thereby, greatly increasing efficiency and reducing time required to produce sufficient quantities of vaccine for large populations. Arcturus is pleased to contribute in the global efforts to develop a COVID-19 vaccine for which there is an urgent unmet need.I will now turn the call over to Andy, who will discuss our fourth quarter full year financial results.

Thank you, Joe, and good afternoon, everyone. The press release issued earlier today includes financial statements for the fourth quarter and year ended December 31, 2019, which I will briefly summarize. Arcturus' primary source of revenues is currently from license fees and collaborative payments received from research and development arrangements with pharmaceutical and biotech partners.For the fourth quarter of 2019, the company reported revenue of $3 million compared to $7.6 million during the fourth quarter of 2018. Total operating expenses for the fourth quarter of 2019 was $13.8 million compared to $8.3 million for the same period of 2018. The increase in research and development expenses were driven primarily by expenses related to our OTC IND preparation and tox studies and due to expenses associated with the launch of our new STARR program. Although we also saw increased expenses with our Cystic Fibrosis program, our grant from the CF Foundation mostly offset these expenses due to the contra expense account reporting requirements. For more details, please refer to our 10-K, which will be filed shortly.General and administrative expenses in the fourth quarter of 2019 were lower by $1.6 million compared to the prior year due primarily to a onetime insurance settlement offset by higher compensation expenses. For the fourth quarter ended December 31, 2019, Arcturus reported a net loss of approximately $11 million or $0.76 per basic and diluted share compared with a net loss of $1 million or $0.10 per basic and diluted share in the prior year period.I will now provide a summary on financial results for the year ended December 31, 2019. For the year ended December 31, 2019, Arcturus reported revenues of $20.8 million compared with revenues of $15.8 million in the prior year. Total operating expenses for the year ended December 31, 2019 were $46.3 million compared with $37.6 million for the same period in 2018. For the year ended December 31, 2019, net loss was approximately $26 million or $2.15 per basic and diluted share compared with a net loss of $21.8 million or $2.16 per basic and diluted share in the prior year.At December 31, 2019, Arcturus had cash and cash equivalents totaling to $71.4 million compared to cash and cash equivalents of $36.7 million at December 31, 2018. I am happy to announce by the end of March quarter, we will receive the first installment of $5 million from Singapore for our coronavirus collaboration with Duke-NUS. Based on our current projections, the company's current cash position is expected to be sufficient to support operations through the first quarter of 2021.Joe, I will now turn the call back over to you.

Thanks, Andy. In summary, the ultimate goal for all of us at Arcturus and our partners was to provide treatments for patients who are afflicted with illnesses where there is high unmet need and no effective treatments. Providing hope for better health is what drives us every day as we advance the development of our innovative and novel mRNA medicines. We are enthusiastic about 2020, and we'll continue to execute upon expanding our pipeline, moving our programs forward and securing additional potential partnerships.As I said, the advancement of ARCT-810 into the clinic marks the transition of Arcturus to becoming a clinical stage company, and this is something to which we are very proud.Thank you for your time. I think now is an appropriate time to pause, and I'd like to open the call for questions.

[Operator Instructions]. The first question is from Madhu Kumar of R.W. Baird.

I guess our first one is, noting that you said you're going to give more details about the 810 trial once the IND clears, what are some kind of broad stroked aspects of the design of the OTC trial that you can kind of walk through. And I guess, along those lines, what have you learned from the previous OTC deficiency trials that have happened, let's say, [indiscernible] trials or the Ultragenyx gene therapy trials that would inform your own study with 810?

Madhu, first of all, thanks for calling in and asking some questions. Yes, just to reiterate, first and foremost, we do expect to provide more details on the clinical plan once the IND has been accepted. We do have an understanding from the FDA. They've recommended that we go directly into stable patients, and we're currently evaluating the merits of a study utilizing healthy volunteers. But once that IND is accepted, that will provide the right -- the appropriate time for us to disclose more details there. Pad, maybe you can comment on some of the other aspects of what is asked.

Sure. Again, typically, at least from what we've seen in some of the other trials, we know that steroids are typically avoided in OTC patients. So that's a -- so we will be encouraging not their use. However, of course, this is going to be a clinical trial and clinicians should be free to treat any symptoms that the patient may develop. And we have looked at some of these other trials in this space. And again, some of the details around the plan will be provided once the IND is accepted.

Okay. And then kind of following up on that, I remember, there's also the glycogen synthase disease type 3 program. What's the latest study? Is that still planned for a 2020 IND? And are there any updates to the Cystic Fibrosis program?

Well, with respect to our partner programs, like LUNAR GSD 3, we can definitely comment that that's ongoing and active, but because this is 1 that was led by our partner Ultragenyx, ultimately, they're responsible for providing guidance on this. And both Pad and I look forward to giving that guidance as well.

Yes. And again, I just want to reiterate that the GSD program is ongoing preclinical testing, and this is led by our partner. So the IND and first-in-human will be conducted by Ultragenyx. So I think they'll be providing more guidance, and I look forward to this as well.

Okay. And CF?

With respect to CF, we remain on track. We didn't talk about that in the call so far. But we remain on track to select the development candidate in 2020. And we aim to have a productive pre-IND meeting this year as well. So those are our 2 key objectives for 2020. And Pad?

Yes. And we'll be sharing more preclinical data as well later on at couple of different conferences as well.

The next question is from Whitney Ijem of Guggenheim.

Just a follow-up on OTC. I know you said you'll provide more details on the study at the time of IND. But I guess, as you think about the healthy study, I guess, what would be the merit of doing that? Or why wouldn't you move out treating into patients? Just trying to understand the pluses and minus you're weighing there.

Well, why we're considering a study with healthy volunteers is the healthy volunteers are obviously quicker to recruit, quicker to evaluate, quicker to obtain data, determining a maximum tolerated dose, for example, and then we can always leave that back into the patient arm and help accelerate not only the recruitment of patients and intra-patient dosing, we can negotiate these types of things with the FDA at the appropriate time. So there are certain advantages to doing it. But with respect to details around our clinical plan, again, we look forward to sharing those at -- when the IND is accepted.

Okay. Got it. And then maybe for Singapore COVID partnership. Just curious what are the next steps from here? What are you -- what work is ongoing now? And then second part of the question is, I guess, once you figure out what you need to make, I guess, can you walk us through the time lines maybe from starting to manufacture from beginning to when you have sort of product ready to ship and test?

So this is for the COVID-19 vaccine?

Yes.

Yes. Okay. So I think it might be helpful just to provide some additional background there. So in November, we disclosed the STARR technology via a press release. There was a vetting process that ensued and involved evaluation of the RNA or the STARR technology and combining that with the LUNA delivery. We had the opportunity to showcase or discuss and go through a vetting process of the innovative manufacturing processes and our capability, scalability, reproducibility for drug substance and drug product manufacturing. And ultimately, it ended up that we then selected as a collaboration partner by Duke-NUS and the Singapore government. So -- and we are obviously pleased with that.With respect to timing, this is a consistent question we get from the media, for example, and they often ask when are we going to have this vaccine ready. To date, we've been telling everyone as soon as possible, of course. We are very aware of the urgency to get a vaccine to people as soon as possible. Pad, do you want to comment?

Yes. No, and I just want to say, internally, we're working around the clock. Obviously, there's key steps that need to happen. First is making the messenger RNA, scaling up the RNA. We've already selected the target that we're going to be using for this vaccine. So now we're just in the process of scaling up and providing our partner with drug product, so they can start some of the early evaluation. And then we'll try to get into and start having some conversations with the regulatory agencies there and get this into the clinic as soon as possible.

The next question is from Wangzhi Li of Ladenburg.

Congratulation on the IND buyout. Look forward to more details after the IND clears. But could you give some color in terms of once the IND is cleared, how long will you start to enroll patient -- healthy volunteers first? And what do you think the enrollment speed would look like for healthy volunteer and later on patients?

Right, right. Well, as the OTC program -- and by the way, Wangzhi, thanks for joining the call. But -- and for the question. As the OTC program matures, we will be able to determine the rate of patient recruitment. We do not have that data to share at this time. But we've taken this topic very seriously and have made the necessary preparations to do what we can to accelerate the phase of the process. We're -- we also have our Chief Development Officer that is intimately involved in driving this process as well, who's very experienced in this area. So we're glad to have the right people driving this. And clearly, this is going to be an ongoing question in subsequent calls as we track patient recruitment.

Yes. Wangzhi, this is Pad. And again, when talking about patient recruitment, especially in this rare disease population, we're going to envision that a lot of the contracting process as well talking to the academic centers as one of the key challenges and getting those centers onboard with our IND is something that's going to take some time, but we're going to try to accelerate this as fast as possible once our IND is approved.

Got it. And then just to clear for the COVID-19 vaccine, I think we understand -- at least I think it's easy to understand that [indiscernible] traditional messenger RNA vaccine. But in the high level, could you also comment on what's your the STARR [indiscernible] vaccine in terms of advantages or maybe disadvantage versus the DNA vaccine by other companies?

Yes. Sure. So all of the vaccine companies who are in the business are trying to do the same thing. We want to inject it. We want to produce or inject an antigen to provide some sort of vaccine response, right? And DNA vaccines is one of the approaches. RNA vaccine doses are much lower than DNA vaccine doses. And we found that the self-replicating RNA technology, the STARR technology, are estimated to be even lower so that in the micrograms level, not milligrams like you often see for DNA vaccines. So that is a clear differentiator. And that translates, of course, into manufacturability and the demand to make the amount of the suitable amount of doses to service a large population. So there's a significant differentiator there.

Our next question is from Yasmeen Rahimi of Roth Capital Partners.

Congrats on filling the IND. A number of questions with you across numerous topics. Starting off on OTC, I'm aware that you are not able to give a lot of color on the design and size and time lines at this moment, and we respect that. However, I would love to hear Pad's thoughts on 2 key endpoints are rate of neurogenesis as well as plasma ammonia levels as proof-of-concept. So can you kind of give us a little bit of color of how we can control? What we should be looking for powering around those endpoints that prove proof-of-concept?Second question for you is, what are you doing behind the scenes to qualify for the potential $8.3 billion grant that the U.S. government is providing for coronavirus funding?And then the third question is related to manufacturing. We know that you are a large manufacturing batch of 12.5 grams. Can you be specific, which modality is that? Are you able to scale up prophylactic vaccines over intracellular modality? So if you could give color on that would be very helpful.

Sure. So with respect to the first question around biomarkers, Pad, how about you address that? Biomarkers for the OTC deficiency?

Of course. Yes, of course -- thanks for the question, Yasmeen. And of course, we will provide more color on all these aspects once our IND is accepted. But sort of broad strokes, yes, those are the key endpoints that we'll be looking at, the ammonia levels as well as some other key biomarkers that are well understood in this space. So our initial trial when we -- in the patient trial is going to be stable patient population. So -- and that's where we're going to be looking for safety. So we can't comment a lot about the movement of the biomarkers or any other aspect to the clinical trial until we have more clarity on what the FDA is accepting. And then the -- I think the second question...

I think the second question was about $8.3 billion. Well, I'll give the first crack at that, Pad. So I think the -- everyone is closely tracking the COVID-19 crisis right now. And we know that WHO has issued their update on how serious it is. And the U.S. government has put forward the $8.3 billion that you mentioned. We also are aware that $3 billion of that is dedicated to vaccine development. We -- there's several publicly traded companies that are pursuing vaccines for the COVID-19 antigen, right? So you have to assume that all of these companies are looking to that cash that the U.S. government has put on the table to see if we can solicit some of that for our efforts.A couple comments. Number one, as we just went through this process with the Singapore government, right? And we had to go through the vetting process and get the right people educated and the decision-makers to deploy capital from another government entity. So we've gone through this process already. We look forward to going through this process with the U.S. government as well. The relative size of countries is dramatically different. We acknowledge that difference. And we think that as the decision-makers understand the key issues to address these vaccines, it will bode well and benefit our tourists.And what do I mean by that is the present issues for -- like the current challenges, the current challenges for the COVID-19 vaccines is, number one, the size of the dose. We've already commented on that. But the other one is feasibility of manufacturing, and this will dovetail nicely into your third question. But the size of dose we've commented already is micrograms rather than milligrams or large numbers of micrograms. So by limiting -- by addressing the size of the dose with STARR and LUNAR technologies, our doses are much lower than other vaccines.With respect to feasibility of manufacturing, to date, we've showed large RNA manufacturing has been completed with our LUNAR OTC program. This is the messenger RNA construct, but it was very large. And in the manufacturing of our RNA drug substance where the RNA is a large molecule, this is something that we have significant experience in. We've exemplified our manufacturing capabilities in large RNA in the double-digit gram, in terms of the size of the manufacturing campaign, and this was a single manufacturing campaign, not several smaller batches.And so with -- and then my final point, and I'll turn the time over to Pad. But because we've addressed the size of the dose and the challenge of that with STARR and LUNAR and because we've addressed the feasibility of manufacturing of large RNA, both on the drug substance and the drug product and double-digit gram scales, this positions us well to address large populations or provide a single GMP manufacturing run that can be used for large amounts of people.

Yes. Thanks, Joe. And again, so just make sure it's clear that our manufacturing process for messenger RNA that we're utilizing for the LUNAR OTC is very, very similar to what we're going to be employing for the STARR platform as well. So we don't envision any challenges in terms of manufacturing. And again, one other key point for the STARR vaccination platform is that we envision potentially just having a single administrations, which is obviously going to be very beneficial in this sort of situation.

Yes. And that's a differentiator as well.

The next question is from Ed Arce of H.C. Wainwright.

Congrats as well for filing the IND today on 810. So a few questions for me. I realize that you are, of course, waiting for acceptance on filing from the FDA. But once you do, could you perhaps discuss the time line as you see it at this point in terms of starting the trial, screening patients? And then how you think about either healthies or patients, depending on how you decide to proceed?And related to that, did the agency indicate at all to you what was perhaps their motivation for suggesting that you start directly into stable patients as opposed to healthy person? And then I have a couple follow-ups.

Thanks for calling. Again, as we mentioned, so we've just filed IND, and we're getting ready. Once IND has been accepted, we will discuss more details around the clinical plan as well as provide more color on sort of timing with related to the clinical trial. But again, we're in discussions with our CRO. We're trying to talk to the clinical sites and get all those things sort of lined up in anticipation of that approval. So Joe, do you have anything else to say?

You also asked a question of why the FDA asked us and other regulatory agencies have asked us to go directly into patients. There's a few reasons for this, but we view these regulatory agencies as partners in this process. They want us -- these patients to gain access to safe and effective treatment as soon as possible. And so the -- after the discussion, they thought that the most efficient way would be to start immediately in the patients, and we view that positively to compress and accelerate the time through the clinic.

Okay. And perhaps, this also has been reviewed by -- in previous questions, but given the coronavirus vaccine COVID-19 as you now call it, is now underway with your partner, Duke-NUS. Is there any time line that you could share, not so much in terms of when people want the vaccine, but in terms of just development steps, next steps and perhaps tied to that, the $5 million milestone, what was that specifically for? And are there any other that we could anticipate later in the year?

Sure. So first of all, I'd like to reference you to the 10-K that we'll be filing sometime soon. And that agreement will be included as an appendix in the 10-K, and you can perhaps address some of your questions there. Some comments, too. First of all, we are working with the Health Sciences Authority. This is the FDA equivalent in Singapore. We're working also with the Duke-NUS Medical School. This country, this regulatory agency, this medical school is very well versed and unfortunately, experienced with pandemic and epidemic viral outbreaks. So they've got a lot of experience with these type of infectious diseases, and we're very fortunate to be working with them.And with respect to timing, though, what we do very well is we know how long it takes to make and manufacture a messenger RNA drug product. This is something we can do very well, and we understand the timing of that. And fortunately, what's good about this is that's not a very long time. What is uncertain at this point, and it is for all of the vaccine companies, is how long will it take to approve and go through the regulatory process under these serious conditions around the coronavirus and how it's spreading very quickly. So we're working with both Duke-NUS and of course, the regulatory agency in Singapore, and we hope that we'll be able to accelerate and compress time lines accordingly, so that we can get this vaccine to where it needs to be as soon as possible.

Okay. Fair enough. And last question for me, if I may. Well, actually, can you disclose the CRO that you're working with on your OTC program? And then separately, a financing question perhaps for Andy. You had discussed some of the reasons why the R&D spend in the quarter was significantly higher than previous quarters. But also wondering if you could comment on the recent increase in the share count as well?

Yes. In terms of the CRO, we haven't disclosed that who we're working with. So Andy?

Andy?

Yes. With respect to the recent -- I mean, our share count remains increased because of the offering we did earlier this year where we sold 2 million shares at $11.50, and we raised about $23 million. So that would have resulted in higher shares at that point in time. And then we also sold shares to Ultragenyx, our strategic partner at $10 a share. And so those were the 2 fundraising efforts that we had accomplished earlier this past year, that accounted for most of the share increase. Hopefully, that answers that question for you.And with respect to the R&D expenses increasing, I think that's good news because that means that we are obviously initiating the CF program and ramping that up. Obviously, OTC is very critical, the flagship program. So as you can tell, being able to file the IND on time was a major achievement for our company, and certainly, the first IND ever for this company. So we're excited about that. And of course, the STARR program, which we announced in the fourth quarter, also had a lot of expenses related to the ramp-up of some of the top studies and formulations that we've been working on. And as Pad articulated earlier, we actually have designated already a solution that we're going to be working on with Singapore. So I'm pretty excited about that.

The next question is from Keay Nakae from Chardan.

Joe, congrats on filling the IND. Two questions for you. One, with respect to the upcoming first-in-human study, why wouldn't you want to have some data on moving your 810 in normal healthy volunteers just to broaden out that database of safety?

It's a fair question. Right now, we think that all data is valuable. So without disclosing too much detail with respect to our clinical plan, yes, of course, we would look at healthy volunteer study and healthy volunteers is being valuable, not only for the OTC program, but for our platform as well. Because our platform, we're in continuous discussions with our present partners and potentially new partners down the road. And so having this data in healthy volunteers would be valuable to support that part of the business.

Okay. Great. And then a second, with respect to your COVID-19 vaccine. Given the source of the funding, does this in any way constrain if you are able to successfully develop a vaccine? Does this in any way constrain your ability to use it more broadly geographically?

No. We have complete flexibility outside of Singapore to commercialize and manufacture the vaccine for other countries and government entities. Of course, we will be looking closely and many other people will be looking closely at the data we generate on this program.

And of course, and I'll just reiterate that we're going to be looking at our possible paths of doing clinical trials. So thank you.

The next question is from I-Eh Jen of Laidlaw & Company.

Again, I will also add my congrats for your IND filing. Just a few real quick questions. First, on the 810. Would that be likely that -- I know you can't reveal more. But would that be likely that you will have a sort of hybrid model in terms of have some healthy volunteer and quickly into patients that's potential to fulfill multiple objectives?

Again, we can't comment a lot about that. But yes, I mean, we're looking at all options. And you'll definitely hear more color about what our strategy is going to be very shortly.

My second question is lot of housekeeping that follows the previous one, which is that for modeling purpose for the operating expenses, if you will look into the third quarter '19 as a base to grow or if you will look into the fourth quarter '19 number as the base to grow for the 2020?

Well, unfortunately, we don't provide guidance on that -- those matters. And so I think you just have to try to do the best you can with the historical numbers, and assume that we're going to be into the clinic. And with all of the experience that you have, you certainly can extrapolate some good assumptions and hopefully come up with a reasonable forecast for the year. But unfortunately, we just do not provide the kinds of specific guidance.

So that's fine. And maybe just last question here, which is about the COVID-19 vaccine. You mentioned earlier, you already identified the target, if any. And are you going to reveal what that is? And would that be possible that given this is a RNA vaccine that you could also potentially do multiple targets or change or whatever, if the, for example, mutations would set in for the virus strain [indiscernible].

See, we haven't revealed what the target is, but the entire community is working towards a very similar vaccine concept, right? We just need to vaccinate large groups of people with the antigen. And there's not going to be significant differences between these approaches in terms of what that antigen is. But we haven't revealed the specific detail exactly what we're doing. And if, for whatever reason, the mainstream approach to this vaccine is a challenge for all of the companies, we have plenty of other approaches that we can also elucidate and understand and evaluate in the background as a backup. So we're well positioned there as well, if, for whatever reason, the primary antigen that people are working on is a challenge.

And we're also looking actively in the space and to see if there's any mutations that arise, and we're keeping definitely an eye on that as well.

The next question is from Kumar Raja of Brookline Capital Markets.

Congratulations on the IND filing. So in terms of the Cystic Fibrosis program, you guys had earlier talked about conducting some varied studies. What's happening in that front? And also, in terms of the uptake in the lungs, what's the expectation in healthy humans versus cystic fibrosis patients where there is a lot of mucus present? And also what is the expectation in terms of translation from what you see in the mouse models?

I appreciate the question, Kumar. The data we've shown to date has been in wild-type animals, and we've shown very clear functional and delivery of messenger RNA to bronchial epithelial cells. We've also provided some stability data of our LUNAR formulated RNA CF therapeutics in CF patients' sputum and that was done early in the program in order to engage and hit milestones that were dictated by the CF foundation as prerequisites to additional funding. So we have evaluated our technology for stability in patient sputum. We've evaluated it, as you know, in wild-type animals for functional delivery of messenger RNA to bronchial epithelial cells.But to address the core of your question, what -- how this will perform in a human being with the different levels of -- and amounts and types of mucus and phlegm in their lungs, that remains to be determined. But we are -- we believe that our therapeutic is specifically designed to allow time for that biodistribution to occur because of the stability that I mentioned, the stability data of our LUNAR formulated RNA in patients' sputum.

And again, this is Pad. And we'll be sharing more data around our preclinical plan as well as some of the translational work that we're doing at the ASGCT Conference in May in Boston and some of the key aspects that you're asking. And we're collecting a lot of that data. And we -- and just look out for that poster or the presentation that we'll be doing in that meeting.

And also in terms of delivery, you guys have already data in terms of liver, lung as well as ophthalmology. Looks like for COVID, you need to target the muscle. What data do you have in terms of like delivering to the muscle?

Yes. We showed -- at a recent conference, we had the opportunity to present some protein data where we showed that our STARR technology showed a 30-fold improvement or higher protein production relative to conventional messenger RNA. And this is a direct controlled experiment, and we presented that recently. Anything else to add, Pad?

No. And again, just -- this is going to be, obviously, a local therapeutic injection directly into the intramuscular site. So I mean, so the challenges are not as high as some of the other delivery routes that we've worked on.

Yes. Yes. Where we differentiate again is our LUNAR -- every technology which is -- tends to be more biodegradable and also our STARR technology, which allows us to dose at a much lower dose.

And in terms of the pre-IND meeting with the FDA, maybe you can share some thoughts, like what's expected from there?

Pre-IND meeting, you mean for the CF program or...

Yes. For the CF program.

Yes, for the CF program, the timing of that. Yes. Again, we're -- as I mentioned, we're collecting some preclinical data, we'll share a lot of that data probably in the first half of this year, and then we anticipate having discussions with the regulatory agencies in the second half. And once we have that data, we'll provide more color.

This concludes the question-and-answer session. I will now turn the call over to Joseph Payne for closing remarks.

Thank you, everyone, for listening in. We appreciate the time. At this point, we're just going to close the call, but please feel free to reach out with any follow-up questions. We'll try to address them shortly. Thanks again. Bye for now.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.